Shares in travel giant Flight Centre (ASX:FLT) fell more than 8% on Wednesday morning after the company issued what investors perceived as a downgrade, tempered with weak news.
The company revised its forecasts for Total Transaction Volumes (TTV), which are now expected to be in line with, rather than exceed, the 2018-19 peak of $23.7 billion.
Despite the flattening out, the rise represents a substantial $1.7 billion from the previous year, according to the company.
As a result, the company adjusted its guidance for the year ending in June (results will be released next month), with the full-year pre-tax profit expected to be in the narrow range of $316 million to $324 million, instead of the previous range of $300 million to $340 million.
This update is both an upgrade and a downgrade, as the market interpreted it, but the narrower guidance will still be higher than the 2022-23 outcome, which was constrained by the impact of COVID restrictions both domestically and internationally.
The narrower range represents a 130% increase compared to 2022-23, which was expected given the restrictions in place during part of the previous year.
The revised profit range excludes $4 million in trading losses from the Discova Central Americas (DCA) destination management company, following the group's decision to close the business.
CEO Graham Turner noted that while market conditions had been challenging during FY24, TTV growth remained solid as customers prioritized travel over other discretionary spending.
However, year-on-year growth rates were negatively affected by the closure of the Indian wholesale foreign exchange business and significant airfare price deflation.
Ryanair and Delta Airlines have both commented on the decline in airfares in the large North Atlantic market, and both giants expect this trend to continue at least until the fourth quarter of this year.
Flight Centre reported that average international airfares dropped 6% globally during the second half of the year, and by almost 13% in Australia, which offset the approximately 10% growth in local ticket volumes during the same period.
